Marathon Oil sells two tranches, MetLife remarkets securities; financials recover in trading, Marathon tightens

By Andrea Heisinger and Paul Deckelman

New York, Feb. 11 - Issuance in the high-grade bond market hit a midweek slowdown Wednesday, with Marathon Oil Corp. and a remarketing of notes from MetLife, Inc. making up the bulk of the day's offerings.

The remainder of the week is expected to have minimal activity going into a long weekend, a source said.

In the secondary sphere on Wednesday, a market source said the widely followed CDX Series 11 North American high-grade index was tighter by 3 basis points on the day to a mid bid-asked spread level of 193 bps, versus 196 bps on Tuesday.

Advancing issues continued to lead decliners, by a nearly three-to-two ratio. Overall market activity, reflected in dollar volumes, was off by 13% from the levels seen on Tuesday.

Spreads in general remained wider, in line with lower Treasury yields; for instance, the yield on the benchmark 10-year issue tightened by 6 bps to 2.76%.

Financial issues like Bank of America Corp., which had been 10 bps to 20 bps wider on Tuesday amid market disappointment with the lack of details in Treasury chief Tim Geithner's presentation on how the government was going to reform the TARP program, were seen recovering Wednesday, in line with firmer banking stocks.

Among the industrials, Marathon Oil's new bonds were seen having firmed smartly when they were freed for secondary dealings.

Marathon Oil sells two tranches

Houston-based Marathon Oil sold $1.5 billion of notes in five- and 10-year tranches Wednesday.

The $700 million of 6.5% five-year notes priced at 99.585 to yield 6.599% with a spread of Treasuries plus 487.5 bps.

The $800 million of 7.5% 10-year notes priced at 99.296 to yield 7.602% with a spread of Treasuries plus 487.5 bps.

Both tranches priced in line with price talk of the 487.5 bps area, a source said.

The company plans to use proceeds for things including replenishment of working capital.

Active bookrunners were Morgan Stanley & Co. Inc., Banc of America Securities LLC and J.P. Morgan Securities Inc.

The deal went smoothly, a source close to it said.

"It priced pretty quickly, and came at the amount we thought it would," he said, referring to the issuance size.

"There wasn't a lot of competition."

Another source close to the issue said it was "definitely oversubscribed." There were total books of $10 billion, he said, putting it at more than six times oversubscribed.

There was not much of note about the issue, he said. Most of it was over before 9 a.m. ET, he said, and "it went fast."

MetLife remarkets notes

Insurance company MetLife priced a remarketed issue of 10-year senior debt securities totaling $1,034,999,000.

The 7.717% securities priced at 100.35 to yield 7.666% with a spread of Treasuries plus 490 bps.

The issue was originally announced in a Securities and Exchange Commission filing to include a tranche of five-year notes, but was instead solely 10-years, a source close to the deal said.

Citigroup Global Markets Inc. and Morgan Stanley & Co. Inc. were remarketing agents.

The debentures were originally issued as 4.91% junior debt securities due 2040 to MetLife Capital Trust III in connection with the offering of 6.375% common equity units in June 2005.

When a trust was dissolved last week, holders of units of trust preferred securities gave permission for the remarketing under slightly revised terms, according to the SEC filing.

Slowdown to continue

Predictions of a decrease in new deals heading into an early market close Friday proved true Wednesday.

"There wasn't any reason for it," a source said of the lack of deals for the day. "I think the calendar is kind of empty, and people are still pessimistic about the whole stimulus plan."

One bright spot did come this week, with the announcement that the Temporary Liquidity Guarantee Program through the Federal Deposit Insurance Corp. will be extended through October. It was originally slated to end June 30.

This was good news to the financial high-grade names, but a source said late Wednesday that it didn't really have much impact on the market.

It's "hard to tell" if there's much impact from any news, with a lack of new issues to gauge them, a source said.

Marathon moves up

When the new Marathon Oil bonds were freed for secondary dealings, a trader saw the company's 7.50% notes due 2019 trading at a spread over comparable Treasury issues of 460 bps bid, 450 bps offered, versus the $700 million of bonds' spread at pricing of 487.5 bps.

Another trader saw those bonds at 458 bps bid, 454 bps offered, and saw the other half of that deal - the $800 million of 6.50% notes due 2014 - which had also priced at 487.5 bps over - having come in to 450 bps bid, 445 bps offered.

But Marathon's established 6% notes due 2017 were seen as much as 75 bps wider on the day on supply concerns, at 480 bps over.

Paccar makes progress

Paccar Inc.'s 6.875% notes due 2014 were trading at 455 bps over, the trader said -- in from the 475 bps seen late Tuesday, and in still further from the 500 bps over spread at which the Bellevue, Wash.-based truck manufacturer priced the $500 million of bonds earlier Tuesday.

Paccar's $250 million of 6.375% notes due 2012, which also priced at 500 bps over, had improved Wednesday to 465 bps over.

NewsAmerica notes seen mixed

NewsAmerica Inc.'s $700 million of 6.90% notes due 2019 , which priced on Tuesday at 410 bps over, tightened a little to 405 bps bid, 404 bps offered, while its $300 million of 7.85% bonds due 2039, on the other hand, widened to 442 bps bid, 432 bps offered from 437.5 bps at Tuesday's pricing.

Oglethorpe advances

Oglethorpe Power Corp.'s $350 million of new 6.10% first mortgage bonds due 2019, which priced Tuersday at 325 bps over, firmed Wednesday to 318 bps bid, 310 bps offered.

Financials seen firmer

Among the financials, spreads were seen having tightened modestly as the sector bounced back from Tuesday's slide.

A market source saw B of A's 2.10% notes due 2012 - the busiest high-grade issue, with over $75 million traded as of mid-afternoon - having tightened about 4 or 5 bps to the 78 level.

Other bank names seen on the upside, a source said, included Citigroup, Morgan Stanley and Goldman Sachs.

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